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2017 (12) TMI 122 - AT - Income TaxRevision u/s 263 - understated income disclosed by the assessee - Held that - Apart from issue of refund claimed by the assessee and mismatch of the income and the tax refund as per system of the Department, did not raise the issue of understated income as per gross receipts and net profit and interest from SBI in the show cause notice. Therefore, on such items the Pr. CIT is not permitted to invoke the jurisdiction under section 263 of the I.T. Act or to pass order. It may be noted here that the Pr. CIT without giving notice to the assessee has found that there is understated income disclosed by the assessee. It is well settled Law that assessment cannot be revised on ground which is not mentioned in the show cause notice. Further, when explanation of assessee has not been called for, there is no question of taking any adverse view against the assessee. Further, if Pr. CIT was of the view that contract income is understated, then, he himself should have conducted the enquiry into the matter at the revisional stage and should have called for the explanation of assessee and should have gone into the details and then pass some order. In such circumstances, he should not have restore the matter back to the file of the A.O. The decision relied upon by the Learned Counsel for the Assessee clearly support the submissions of the assessee. As regards the interest earned and TDS deducted by SBI, the Pr. CIT was of the view that this claim has been made against PAN of the Assessee-Firm. However, Learned Counsel for the Assessee referred to PB-14 which is Profit and Loss Account for assessment year under appeal, in which assessee did not make any such claim. Further, such issue was not raised in the show cause notice under section 263 of the I.T. Act. Therefore, such issue cannot be taken in adverse against the assessee in the impugned order under section 263 of the I.T. Act. Considering the totality of the facts and circumstances in the light of above discussion, we are of the view that the assessment order passed by the A.O. is in accordance with Law in which no infirmity have been pointed-out so as to invoke jurisdiction under section 263 - Decided in favour of assessee.
Issues Involved:
1. Validity of the order under section 263 of the I.T. Act. 2. Claim of TDS refund by the assessee-firm. 3. Understatement of income and interest from SBI. Issue-wise Analysis: 1. Validity of the order under section 263 of the I.T. Act: The assessee challenged the order under section 263 of the I.T. Act, arguing that the A.O. had taken a possible view in the matter, which should not be subject to revision merely because the Ld. Pr. CIT disagreed. The assessee cited the decision of the Hon’ble Supreme Court in Malabar Industrial Co. Ltd., 243 ITR 83, asserting that where two views are possible, the A.O.'s view should prevail unless it is unsustainable in law. The Tribunal agreed with the assessee, emphasizing the rule of consistency and noting that similar claims had been allowed in previous and subsequent years. 2. Claim of TDS refund by the assessee-firm: The core issue revolved around the TDS certificates issued in the name of an individual partner, Shri Dayanand, while the contract work was executed by the firm. The assessee argued that since the income from the contract was assessed in the hands of the firm, the TDS credit should also be allowed to the firm. The Tribunal noted that in the assessment year 2012-2013, the ITAT had already set aside the CIT(A)'s order, which had denied TDS credit to the firm. The Tribunal reiterated that the income from the contract was rightly assessed in the hands of the firm, and thus, the corresponding TDS credit should be allowed to the firm. The Tribunal further highlighted that the same position had been accepted by the Revenue Department in preceding assessment years and in the case of a comparable assessee, M/s Ranbir Singh. 3. Understatement of income and interest from SBI: The Ld. Pr. CIT raised concerns about the understatement of income and interest from SBI, which were not part of the original show cause notice under section 263. The Tribunal held that the Pr. CIT could not invoke jurisdiction under section 263 on grounds not mentioned in the show cause notice. The Tribunal cited the decisions of the Hon’ble Delhi High Court in Krishak Bharati Cooperative Ltd., 395 ITR 572, and CIT vs. Contimeters Electricals (P.) Ltd., 317 ITR 249, which establish that an assessment cannot be revised on grounds not specified in the show cause notice. Moreover, the assessee had not claimed the interest income from SBI in its computation of income, further invalidating the Pr. CIT's concerns. Conclusion: The Tribunal concluded that the original re-assessment order was in accordance with the law and not erroneous or prejudicial to the interests of the Revenue. The Tribunal set aside the impugned order of the Ld. Pr. CIT passed under section 263 and quashed the same, restoring the original re-assessment orders for both A.Y. 2009-2010 and A.Y. 2010-2011.
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